Define irony: a world in which the past 7 years have been characterized by an unprecedented "search for yield." Well, now that junk debt is finally dumping, and yields are suging (over 8% blended average at last check) virtually nobody wants any of this so highly yielding junk.
The good news is that out of the approximately $35 trillion in US, European And British debt (excluding Japan and China) there is still about $34 trillion in low yield assets which investors can rush into. Perhaps the question then is not when does junk normalize, but how long before first IG and then Govts suffer the same fate as junk bonds have over the past few weeks.
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Source: Goldman
